OIL PRODUCTION LIKELY TO FALL BELOW TARGET

By Andi Abdussalam

Jakarta, Oct 21 (ANTARA) - The country's oil output this year is most likely to fall below the production target as set in the 2012 revised state budget at the average of 930,000 barrels per day.          Until October 11, 2012, realization of oil reached 867,080 barrels per day, so that the Upstream Oil and Gas Regulator (BP Migas) has predicted that by the end of the year production may only reach 870,000 barrels per day.          The total is 3.6 percent lower than last year's realization which was recorded at 902,000.          Compared to the target set at 930,000 barrels per day in the revised 2012 budget the projection would be 6.5 percent lower.          Due to several factors, it seems that the government faces difficulties in raising natural oil production. It has faced these difficulties in the past several years and will still face it at least until sometime in the future.          "Seeing its condition, it would be difficult for the government to increase oil output," Dito Ganinduto of the House of Representatives (DPR)'s Commission VII on energy affairs, said here on Sunday.          He said the effort to cut production decrease from 10-12 percent to 3.6 percent in 2012 was already an optimal one. According to him, naturally, the decrease of oil production would reach 10 - 12 percent.          The Upstream Oil and Gas Regulator (BP Migas) in its report to the DPR Commission VII indicated that the 2012 oil production was estimated to reach 870,000 barrels per day, declining by 3.6 percent compared with the realization in 2011 which reached 902,000 barrels per day.          According to BP Migas Chief R Priyono, the drop in the production this year was caused by a break in the TGI pipe at PT Chevron Pacific Indonesia on September 29, 2010 and a fire at the Lentera Bangsa terminal at CNOOC causing production loss of 9,000 barrels per day.         Unplanned shutdown in almost all KKKS (production sharing contractors) facilities has also caused a loss of 10,000 barrels per day while delay in rig procurement at Chevron Makassar, Vico, Santos Sampang and Pertamina has caused a loss of 5,300 barrels per day, he added.          BP Migas predicts the biggest oil production of KKKS in 2012 would be that of Chevron Pacific Indonesia at 343,212 barrels per day, followed by PT Pertamina EP at 127,889 barrels per day, Total EP Indonesie 66,400, ConocoPhillips Ind Ltd. 44,306 and PHE-ONWJ at 34,056 barrels per day.          Besides, contract extension has also caused a delay in the drilling of 5,500 barrels per day in the West Madura Offshore and a decline in production at Tunu, Peciko, KE-38 and other fields by 6,500 barrels per day, he said.         Oil and gas production this year meanwhile is estimated at 2.367 million barrels equivalent oil a day, down by 1.6 percent from last year's which was recorded at 2.405 million barrels equivalent oil  per day.         Priyono said without optimization, this year's production would reach only 757,000 barrels per day.         However through optimization production could be increased by 173,000 barrels per day to reach 870,000 barrels per day until the end of this year, he said.          According to legislator Dito Ganinduto, the production prediction at 870,000 barrels per day by the end of the year would constitute the maximal efforts by the government to reduce the decline.          "It is now difficult to raise production now. The decline by 3.6 percent of oil output in 2012 is already an optimal effort," he said.          However,  Dito expressed hope that  oil output would increase again when the Banyuurip oil field in Cepu, began its estimated production of 165,000 barrels per day in 2014.          Besides, Indonesia should also increase explorations and exploitations of new wells or oil fields. In this case the government continues to cultivate new oil blocks.          The oil blocks included those located in various areas  on and off Sumatra  and Kalimantan, Makassar Strait of Sulawesi, Java Sea, off East Nusatenggara and off Natuna and Papua.          Tenders would be held for the blocks, on shore and offshore, between October 2012 and February, 2013 under production sharing scheme.          In addition, the Indonesian government has also offered 23 new oil and gas blocks to Russian investors, according to the Indonesian embassy in Moscow said.          The offer was made on the occasion of a Russian Oil & Gas Conference & Exhibition held in Moscow, embassy secretary  Enjay Diana said to ANTARA news agency in London recently.          Indonesian government officials and oil industrialists took part in the three-day exhibition and conference ending October 18, Enjay said.          In the meantime, State Enterprises Minister Dahlan Iskan has expressed hope that state-owned companies would win oil and gas tenders offered by the government.          He asked seven state firms to take part in tenders for projects worth Rp200 trillion at the Upstream Oil and Gas Regulating Body (BP Migas).       State industry engineering company PT Rekayasa Industri has been appointed a leader of the seven state firms to take part in the tenders, he said.          The other six state firms are state oil and gas company PT Pertamina, insurance company PT Asuransi Jasindo, and construction companies PT Waskita Karya, PT Wijaya Karya, PT Adhi Karya, and PT Hutama Karya.          PT Rekayasa Industri was appointed chief because it had the highest capacity among the seven state firms to carry out projects in the oil and gas sector, he said.        Therefore, PT Rekayasa Industri must soon hand a list of clusters the state firms can carry out, he said.         "We ask BP Migas to inform the state firms of what it can cooperate with the state firms so the Rp200 trillion projects will go to domestic companies," he said.***2*** (T.A014/A/A014/O001) 21-10-2012 20:54:0